Ecconomics test 1

(Figure) What would be a reason why an economy is operating at point D? (lowest point)

A reduction in business investment causes unemployment to increase

Which statement is a CORRECT description of the law of demand?

As prices of a good fall, the quantity demand of that good rises

(Figure) The area between which two points on the productions possibilities frontier could represent an improvement in productive efficiency?

From D-B

Which statement about the pet goods market is CORRECT? I) The market for pet foods has been on the rise in recent years due to the lower costs of producing pet goods II) One reason for the growth of pe goods market has been the increase in the number of availability of goods and services for pets III) Like other markets, the pet goods market typically declines when there are downturns in the economy.

II only

Economics is best defined as

People make rational decisions

Which of these questions would NOT be considered one of the basic economic questions?

When will the new high-speed train in California be completed?

Which factor would NOT cause the demand curve for green tea to shift to the right

a decrease in the price of the green tea

Which factor would shift the supply of skateboards to the right?

a large reduction in the price of wheels used to produce skateboards

For a country to have a comparative advantage in a good, it must have:

a lower opportunity cost of producing that good

What effect does NOT deal with macroeconomics?

effect of Walmart's pricing policies on customers

The supply curve represents the ______ price at which a firm is willing to ______:

minimum, sell various quantities of a good

The field of economics that focuses on decision making by individuals, businesses, industries, and governments is called:

mircroeconomics

Another way of referring to a market economy is as a:

price system

To say that economics is a way of thinking about how people make rational decisions means that people:

respond to incentives

Which statement is NOT true when a market is in equilibrium?

sellers have enough inventory to satisfy all buyers and some left-over for future demand

The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a ____ of _____ units.

surplus; 200

The law of demand states that:

the lower the price, the more of that product consumers will purchase during a given period

According to the law of demand, people buy more of a good when:

the price falls

Scarcity is BEST defined as when:

unlimited wants exceed limited resources